Technical Analysis

EUR/USD Analysis – July 09, 2021

By LonghornFX Technical Analysis
Jul 9, 20213 min

Bearish Engulfing to Drive Selling Trend!

The EUR/USD was closed at $1.1842 after placing a high of $1.1868 and a low of $1.1783. EUR/USD currency pair reversed its course on Thursday after declining for the previous three consecutive sessions. The currency pair managed to recover most of its last daily losses in a single day amid the renewed weakness in the U.S dollar. The declining U.S. Treasury yields that reached their lowest level since February 14 at 1.25% weighed heavily on the greenback and dragged it against the basket of six major currencies. The DXY fell to 92.24 level on Thursday as the Unemployment Claims rose and dismissed the hopes for an earlier than expected easing of stimulus measures by the Fed.

On Thursday, the European Central Bank raised its inflation goals and said it might let the inflation overshoot the target for a while. After an 18-months strategy review, the policymakers agreed to seek consumer-price growth of 2% over the medium-term with an asymmetric aim.

According to ECB, when interest rates are close to lower limits, the economy will need a forceful monetary stimulus that could suggest a temporary period in which inflation is moderately above target. Christine Lagarde said that the new formulation removes any possible ambiguity and resolutely conveys that 2% is not a ceiling. She added that the strategy review was agreed unanimously as the bank wanted to avoid the negative deviation that will entrench inflation projections.

This strategy review was the first by the ECB since 2003, which included a changed inflation goal to the symmetric target of 2% along with ECB allowing a transitory period in which inflation could remain moderately above the target. The climate change considerations will also be included in monetary policy operations. The new strategy will be applied to start with July 22 monetary policy meeting. The Governing Council has intentions to assess its strategy periodically with the next assessment projected for 2025. The single currency Euro gained strength against the U.S. dollar after the release of strategy review from the European Central Bank and pushed EUR/USD higher on board.

On the data front, at 11:00 GMT, the German Trade Balance reduced to 12.6B against the forecasted 15,8B and weighed on Euro that further capped gains in EUR/USD. From the U.S. side, at 17:30 GMT, the Unemployment Claims from the U.S. for last week rose to 373K against the predicted 345K and weighed on the U.S. dollar that added further gains in EUR/USD pair.

EUR/USD Intraday Technical Levels

Support Resistance

1.1794 1.1879

11746 1.1916

1.1708 1.1964

Pivot Point: 1.1831

EUR/USD - Technical Outlook

The EUR/USD pair is trading with a strong bearish bias at the 1.1832 level, disrupting the support level of 1.1837 level. On the downside, the major currency pair has the potential to plunge until the next support area of 1.1797 and 1.1780 levels. On the 4- hour timeframe, the EUR/USD pair is facing resistance at 1.1849 level that’s being extended by 50 periods EMA levels along with a downward trendline. Closing the bearish engulfing candle on the 4-hour timeframe exposes the EUR/USD price towards 1.1807 and 1.1780 support levels. The leading technical tool MACD is also trading in a bearish zone; therefore, the selling trend dominates on the EUR/USD pair today. All the best!


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